Oil prices slid on Friday, with US crude down more than 3 percent on worries that commerce and energy demand in Florida and the Southeast would be hit hard as Hurricane Irma, one of the most powerful storms in a century, drove toward the region.
Oil prices jumped up on September 8 following the data on the slowdown of the USA refineries in the Gulf of Mexico region after the Hurricane Harvey.
As of Thursday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was still shut in and it will take weeks for the US petroleum industry to return to full capacity, analysts said.
On the New York Mercantile Exchange crude futures for October delivery rose by 0.22% to $49.20 a barrel, while on London’s Intercontinental Exchange, gained 0.31% to $54.66 a barrel.
US Gulf Coast facilities were slowly recovering from the devastating effects of Harvey, which hammered Louisiana and Texas nearly two weeks ago, shutting key infrastructure in the heart of the US oil and natural gas industry. Yet another hurricane, Katia, is in the Gulf of Mexico.
Harvey’s impact was also felt in oil production.
OPEC and its partners chose to extend its production cuts till March 2018 in Vienna on May 25, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.
This has provided a support for crude oil prices, as have reports of another three storms brewing in the area of the Gulf, with the potential of growing to hurricanes, causing further shutdowns and damage.
United States oil production dropped by nearly 8 percent, from 9.5 million barrels per day to 8.8 million bpd, according to the report of the Energy Information Administration (EIA).
“Most refineries are restarting and we expect a near-full recovery by month-end”, U.S. investment bank Jefferies said.
It will take weeks for the US petroleum industry to return to full capacity, analysts said.
“Imports (of oil) to the US Gulf Coast fell to levels not seen since the 1990s”, ANZ bank said.
Hurricane Irma hit the Dominican Republic and Haiti on September 8, heading for Cuba and the Bahamas.
It was predicted to hit Florida by Saturday.
Irma barreled into Caribbean islands overnight with wind speeds up to 185 miles per hour (295 kph) and was heading for Florida.
Hurricane Jose is heading for the Caribbean Leeward islands, which have just been devastated by Irma.